Q3 2025 Fresenius SE & Co KGaA Earnings Call

Speaker #1: Good afternoon and welcome to the conference call of Resinous Investor Relations , which is now starting may hand you over to Nick Stone head of investor Relations .

Speaker #2: Thank you . Valentina . Hello , everyone . Welcome to our year to date and Q3 earnings call and webcast . Station was emailed to our distribution list earlier today and is available on business.com .

Speaker #2: On slide two of the presentation , you will find the usual safe harbor statement unless stated otherwise , will comment on our performance using constant exchange rates or CR .

Speaker #2: Today , I'm delighted to be joined by Mike and Sarah , who will take you through the Ebit guidance raise and the disciplined execution that drove the continued performance this quarter .

Speaker #2: As usual , the call will last approximately one hour , with the presentation taking around 25 to 30 minutes with remaining time for your questions to give everyone the chance to participate , please limit your questions to 1 to 2 only .

Speaker #2: We can always come back for a second round if needed . And with that , I will now hand the call over to Michael .

Speaker #3: Yeah . Thank you Nick and welcome to everyone joining us on a very , very busy day . You know , exactly three years ago we hit the reset button .

Speaker #3: And then embarked on a new strategic and transformative journey to deliver a step change in performance with what we call future Frizziness . This transformation was about simplifying our structure , sharpening our focus , and instilling a performance driven mindset .

Speaker #3: But it wasn't just about operational changes . It was about rebuilding the portfolio , reshaping our culture and fostering accountability . A cultural power driving us forward .

Speaker #3: Fast forward to today, and we have started the next phase: Rejuvenate. This has kicked off with great traction and focus, and will guide us for the next few years.

Speaker #3: This phase is all about upgrading the core, scaling our platforms, and as a result, elevating our performance to deliver profitable long-term growth.

Speaker #3: This means , in essence , bringing new products and innovations to market , focusing on the needs of patients and customers and infusing fresh energy into our leadership and management teams to deliver further value , expand ecosystems and create more opportunities for the company .

Speaker #3: At the start of the year , we committed to delivering incremental revenue and earnings growth through new products and services , and our performance year to date demonstrates our continued momentum .

Speaker #3: Future continues to deliver. I am pleased to share with you yet another strong quarter, driven by the resilience and consistency of disciplined execution across Corby and Helios.

Speaker #3: Despite ongoing macroeconomic volatility and geopolitical tensions, we have maintained transparent market communication. Our adaptive and focused strategy has proven effective in navigating these challenges.

Speaker #3: Now , let's turn to the third quarter highlights . After an excellent start to the year , I'm pleased to announce that following the Q2 organic revenue guidance upgrade , we're now raising our full year Ebit growth guidance from three to seven to 4 to 8 .

Speaker #3: The upgraded guidance represents the success of our future strategy and is based on the excellent momentum we have seen year to date . Encouragingly , we see sustained strength in our bottom line with core EPs growing by an impressive 14% , significantly outpacing top line growth .

Speaker #3: This performance reflects strong market position and top line growth , yielding margin expansion , and we expect this momentum to continue . Kirby is an ongoing key driver of our profitability , achieving an excellent 16.7% Ebit margin .

Speaker #3: We see broad-based performance across all segments, with particular strength from newly launched products and continued pipeline progress, particularly in our IV generics and biosimilars.

Speaker #3: You know, great job by the team. Helios delivered another good quarter, maintaining a solid EBIT margin and demonstrating the resilience of its operations.

Speaker #3: In addition, based on the strong cash flow delivery and the quarter, we are now back in our self-imposed target corridor that we tightened at the beginning of the year.

Speaker #3: Now, let's take a closer look at our core businesses, starting with Kaby in Pharma. We have further focused and simplified the business with the successful divestment of the Calia home care business in Canada.

Speaker #3: In the U.S., I am pleased Fresenius was recognized for supply and service excellence. These recognitions demonstrate our unwavering commitment to ensuring supply continuity for essential medicines and technology.

Speaker #3: It also recognizes the more than $1 billion we have invested over several years to strengthen our capabilities and support for the U.S. healthcare system.

Speaker #3: We will continue with U.S. investment to support the healthcare system to deliver affordable and life-changing medicines for patients in nutrition. We continue to enhance our globally leading portfolio and strengthen our position in this fundamentally attractive market through innovation and differentiation.

Speaker #3: In Q3 , we delivered three new product launches in and focused on patients with high energy and protein needs and medtech . We announced our leadership of the Easygen consortium with a collaboration with industry and academia , aimed at accelerating Car-T cell therapy manufacturing , reducing costs and improving patient access across Europe .

Speaker #3: This initiative underscores our commitment to advancing cutting edge therapies and technologies . Now turning to biopharma again . We are increasing sales quarter over quarter as more medicines launch into key markets for the newsroom , a key milestone was achieved with a CMS issuing permanent and product specific billing codes .

Speaker #3: The Higgs Speaks codes . This is an important step forward in expanding access to high quality biologic medicines . While driving broader adoption and ensuring more patients benefit from these innovative , cost effective treatments .

Speaker #3: Another major milestone was the first delivery of vials to European countries from our Mapp Science plant in Argentina. We've now largely completed the technology transfer, delivering a fully vertically integrated supply chain and manufacturing platform to support an.

Speaker #3: This marks a step up upgrading our core to deliver efficiency and increased capability , showcasing the benefit of a vertically integrated platform . All these advancements underscore our commitment to patients around the globe to deliver accessible , innovative and high quality healthcare solutions .

Speaker #3: Covid remains at the forefront of innovation , operational excellence , and patient care . Now , let's take a closer look at our resilient and very strong foundation .

Speaker #3: Our highly cash generative pharma business continued to deliver strong and stable and performance year to date . We have successfully launched 12 products with a total of 15 launches expected for the full year .

Speaker #3: As part of rejuvenate , we are further optimizing our cost of goods sold , streamlining our network and strategically investing to further scale this high margin platform with a globally leading portfolio and a local for local approach , we deliver essential medicines to patients worldwide .

Speaker #3: In the US , we supply 70% of the FDA's essential medicine list under scoring . Our critical role in healthcare in the US with stable , organic growth , highly accretive margins and an attractive cash generation , Pharma remains a strong contributor to our balance sheet and a profitable foundation for sustainable long term growth .

Speaker #3: Now , double clicking on biosimilars . We continue to see strong growth momentum , really strong growth momentum . Last year , the business reached Ebit break even , marking its transition into a scalable , fully operational platform with Mapp science .

Speaker #3: We have built a robust development and manufacturing platform, demonstrating our ability to quickly advance molecules from development through regulatory approval and into the market.

Speaker #3: Our biopharma franchise has now 11 products launched and marketed globally, as previously outlined. A key advancement in biopharma is the integration of Mapp science to deliver a dedicated development and manufacturing platform, including contract manufacturing for biopharma.

Speaker #3: We will continue to upgrade the core and scale the platform to deliver further simplification and drive increased efficiencies as we strive to become a global leader.

Speaker #3: Now , let's look at some of our recently launched medicines or molecules , starting with our tocilizumab biosimilar . We continue to make great progress leveraging our first mover advantage .

Speaker #3: We continue to see excellent market share, growth, and development, which is supported by multiple PBM and health plan contracts, many of which are.

Speaker #3: Turning to a tool for our Ustekinumab biosimilar, we anticipate incremental sales in Q4 following our exclusive U.S. distribution agreement with Civica Script.

Speaker #3: As for our denosumab, we have already achieved some sales in Q3. This is the only biosimilar to offer a subcutaneous 120 mg prefilled syringe for oncology indications, delivering a key differentiation from even the originator and competitors.

Speaker #3: This product profile really strengthens our competitive position. In addition, we are pleased to have recently received FDA interchangeability designation for both denosumab products.

Speaker #3: This allows the medicine to be dispensed at the pharmacy as a substitute for the reference product, creating greater access for patients and healthcare professionals.

Speaker #3: Also, the FDA's recent draft guidance aimed at streamlining the biosimilar approval process and broadening interchangeability designations in the U.S. is a promising development for patients and payers.

Speaker #3: While it may not have fundamentally changed the existing framework, we see this as further support for market growth and expect the U.S. biosimilar landscape to continue evolving positively for the remainder of the year and into next.

Speaker #3: We expect the portfolio momentum to continue as contracting agreements convert into prescription . So watch this space over the past two years , what we labeled as in growth vectors , they have delivered an impressive 37% Ebit on on a kegger basis .

Speaker #3: And year to date , we've achieved an exceptional 18% year over year Ebit growth . This performance is underpinned by new products and new innovations , which we will continue to upgrade and scale as part of rejuvenate the growth vectors are performing in line , if not even better than initially envisioned .

Speaker #3: When we launched Fresenius , not only are they driving accelerated top line growth , but they are also significantly advancing our margin profile at the same time , our structural improvements to the cost base continue to support margin expansion .

Speaker #3: The growth vectors are the key drivers behind elevated profitability, while our established pharma portfolio remains a strong, resilient, and profitable foundation.

Speaker #3: Looking ahead to 2026 and beyond, we expect this positive trajectory to continue. Key drivers here are the increasing contributions from biopharma, sustained product momentum, and upcoming innovations in nutrition.

Speaker #3: The step-up in medtech profitability is all underpinned by our Resilient Pharma business. Now, let's turn to the Q3 highlights in our care provision platform.

Speaker #3: Helios . Overall , the German reimbursement environment continues to be , by and large , supportive . However , for 2026 , the projected dog inflator is anticipated to be approximately 3% , which is lower than initially expected due to to a methodology change that favored the lower parameter versus the corridor of the two parameters .

Speaker #3: Previously used . This new percentage is broadly in line with the historical median . The one time invoice surcharge of 3.3. 25% , with public insurance is an encouraging development .

Speaker #3: It is effective between November 1st , 2025 and October 31st , 2026 , and is a clear positive , supporting several years of previous hospital cost inflation .

Speaker #3: We continue to remain optimistic about government reimbursement in the coming years, even though recent events would seem to prioritize fiscal rather than healthcare policy, and Germany remains committed to advancing medical innovation and improving patient outcomes.

Speaker #3: For example , in Berlin and whispered in lung cancer centers are pioneering the use of innovative robot assisted bronchoscopy systems . The cutting edge technology enables earlier and more accurate diagnosis , often unlocking opportunities for life saving , curative treatments , making or marking a true paradigm shift in pulmonology .

Speaker #3: In Spain , Kiron Salud continues to demonstrate its strong focus and research , and innovation , with 285 new clinical trials initiated year to date , including 159 in phase one and phase two .

Speaker #3: This just reinforces its position as a leader in clinical innovation , with best in class healthcare professionals in state of the art hospitals remain the top choice for patients seeking exceptional care .

Speaker #3: I am excited by our continued EPs momentum through structural cost savings. We have laid the foundation for transformation. Now, in Rejuvenate, we're building on that strong foundation.

Speaker #3: Station by upgrading the core, scaling our platforms, and elevating performance to drive long-term, profitable growth. Productivity is no longer just about the cost side.

Speaker #3: It's fueled by . Future strategy . Further operational progress and a benefit from reduced . Interest expenses . Our strong EPs growth is significantly outpacing top line growth , highlighting our ability to sustainably improve returns and to deliver shareholder value .

Speaker #3: We expect this positive trend to continue as we close out the year. The EP's momentum generated by Rejuvenate is evident as our growth vectors continue to deliver further profitability improvements.

Speaker #3: For example , Biopharma is gaining significant traction with momentum , accelerating going forward . With that , I'll hand it over to Sara .

Speaker #4: Thank you Michael . And thank you all for joining . Let's start with our financial highlights . Consistent , strong , organic sales growth sequentially .

Speaker #4: Increase in EBIT growth and a meaningful EPS improvement. Looking at the top line, Q3 was another strong quarter with 6% organic revenue growth.

Speaker #4: Our consistent delivery demonstrates the strength of our business as well as the structural demand for the system: critical products and services we offer.

Speaker #4: EBIT growth was in line with revenue growth at 6%, a nice acceleration from Q2. Kirby's excellent performance has offset the expected and well-flagged Q3 effects at Helios.

Speaker #4: My KPI this year is our core EPs growth in Q3. We grew EPs by an impressive 14% and achieved another quarter of double-digit growth, making it two out of three quarters in 2025.

Speaker #4: Two effects came into play our strong operating results , combined with a significant year over year decrease in interest expense of €35 million following our Q3 financing activities and with the continued focus on interest expense management , we now expect 330 to €340 million of interest expense for the full year .

Speaker #4: Our tax rate for the quarter was 24.7%, in line with our expectations for the full year. The leverage ratio, at three times net debt EBITDA, was within our self-imposed target corridor of two and a half to three times.

Speaker #4: Deleveraging is expected before year-end. Kirby had a strong quarter with a successful and disciplined execution on the launch pipeline and rollouts. This resulted in some contributions already materializing in Q3 that were initially only expected in all of this year.

Speaker #4: Organic revenue grew by 7%, placing it at the upper end of the structural growth range, with some additional benefits from pricing effects.

Speaker #4: In Argentina, the growth factors remain the primary driver of performance. Biopharma, in particular, stood out with 37% organic growth, while nutrition delivered 7% growth, demonstrating the attractiveness and structural strength of this business.

Speaker #4: Despite the impact of the Cato volume-based tendering in China, pharma sales increased by 2% organically relative to a strong prior year base in Q3.

Speaker #4: Kabi delivered an excellent EBIT margin of 16.7%. This represents roughly 80 basis points of margin expansion year over year, including the absorption of the Cato effect.

Speaker #4: We have contributed to the performance . First , the growth factor significantly expanded . Their Ebit margin year over year to 15.9% , moving close to Kirby structure , margin range of 16 to 18% .

Speaker #4: Second, an excellent profitability at Pharma with a margin of 22%. And third, the strong operating leverage due to the disciplined execution and further incremental structural productivity improvements across all business units.

Speaker #4: Over to Helios , our hospital business continues to deliver strong organic , top line growth at 5% year to date . Revenue grew by 6% organically , which is at the upper end of the structural growth band .

Speaker #4: We delivered solid profitability with an Ebit margin of 7.5% , despite the loss of energy relief payments and the fluctuations in Spain year to date , the Ebit margin is at 9.1% at Helios Germany , we achieved solid organic growth of 4% , driven by strong admission growth and positive pricing effects balanced by somewhat lower case mix points .

Speaker #4: This performance also needs to be viewed against the strong prior year base , which included some favorable technical revenue . Reclassifications from an Ebit perspective , margins stood at 8% , and as a reminder , Q3 24 included the final energy release payment .

Speaker #4: The performance program is progressing and has achieved over half of the approximately €100 million target year to date. Further significant progress is expected in Q4, with potentially some spillover into next year.

Speaker #4: Helios Spain achieved strong organic growth of 7%, driven by a favorable mix of activities and pricing, as well as a strong performance in the occupational risk prevention business.

Speaker #4: With operating leverage at work , the Ebit margin in Spain reflects the usual summer dip . Nevertheless , at 6.6% in Q3 , the margin shows a 20 basis point increase year over year .

Speaker #4: Year to date , Helios Spain has delivered a strong margin of 11.3% . Moving to our cash flow again , a strong performance , especially against the backdrop of a tough prior year comparison .

Speaker #4: We continue to deliver on our cash conversion ambitions. Operating cash flow in Q3 was driven, in particular, by Kaveh contributing approximately €440 million.

Speaker #4: A great achievement. Helios delivered a robust and reliable Q3 cash flow of around €330 million, despite a very tough prior year comparison. Proceeds from our pro rata sale of medical care shares are included in the cash flow bridge under acquisition and amounted to approximately €30 million in the quarter.

Speaker #4: As of today, we have sold approximately 1.5 million shares in conjunction with FMC's ongoing share buyback. ACM cash flow numbers are a testament to the reliability of our cash generation, with €2.2 billion in operating cash flow.

Speaker #4: When considering free cash flow for the last 12 months, note that dividend suspension in 2024 influenced the prior year LTM number. Over the past two years, we have made significant progress in reducing our leverage by approximately 100 basis points.

Speaker #4: This deleveraging has been a key driver behind the acceleration of our EP's growth, highlighting the focus we place on cash flow. Deleveraging remains one of our top priorities within our capital allocation framework.

Speaker #4: At the same time , we are balancing this with targeted investments aligned with our strategic agenda and strict return criteria to upgrade the core and scale our platforms and ultimately to create value and deliver long term profitable growth on the financing side , we adopted a forward looking perspective and capitalized on attractive market windows with the successful transactions in September , we we proactively addressed our refinancing needs for 2025 and most of the first half of 26 , we used two €500 million bonds with attractive coupons and concurrently repaid early a €500 million bond with a coupon of 4.25% maturing in May 26th .

Speaker #4: At the same time , we signed a new €400 million loan agreement with the European Investment Bank , which will be used to support our R&D activities and selected CapEx investments .

Speaker #4: These activities demonstrate our commitment to managing within our self-imposed leverage corridor of two and a half to three times net debt EBITDA . With that , let's wrap up Q3 and take a look at Q4 , where we expect an acceleration of earnings growth .

Speaker #4: As mentioned , positive phasing effects have helped our Q3 performance , thereby de-risking the expected acceleration to some extent . At Helios , we expect a further increase in Ebit contribution due to the Performance Program in Germany .

Speaker #4: In addition , we anticipate to start receiving the surcharge for publicly insured patients , which came into effect on 1st of November . At the same time , we we expect the usual year end topics , including reimbursement settlements , which may affect Ebit .

Speaker #4: The fourth quarter will also reflect a year over year comparison without energy relief payments in Spain , Q4 is typically the strongest quarter of the year , but this is against a tough prior year comparison .

Speaker #4: Kirby will continue to absorb the adverse effects from Quito , as well as macroeconomic headwinds , which includes some effects from US tariffs , particularly for medtech .

Speaker #4: However , the strong product launch execution combined with our successful productivity measures has resulted in an excellent Ebit margin year to date . The operational momentum is expected to continue given this context , we may deliberately decide to make some incremental investments during Q4 , such as an R&D .

Speaker #4: This aligns well with rejuvenate to upgrade our core and scale our platforms . Taking all of this together , what does it mean for our full year guidance following our Q2 revenue upgrade ?

Speaker #4: We are now also raising our full year Ebit guidance based on the good momentum and disciplined execution in the first nine months . We now expect group Ebit growth at constant currency to be in the range of between 4 to 8% .

Speaker #4: Remember that guidance is at constant exchange rates , adjusted for translation effects . We continue to expect FX volatility in Q4 , and if current rates persist , revenue and Ebit will each be adversely impacted by approximately two percentage points .

Speaker #4: In summary , our disciplined execution and strong operational momentum have provided us well for the remainder of the year with continued focus on delivering sustainable growth , driving productivity and maintaining financial discipline .

Speaker #4: We are confident in our ability to achieve our upgraded guidance and create long term value . Thank you for your attention . And with that , I'll hand back to Michael .

Speaker #3: Well , thank you Sarah . As we look ahead , Fresenius is a very well positioned to seize the opportunities which also lie ahead with a strong presence in attractive markets underpinned by a robust secular growth trend .

Speaker #3: We are committed to sustaining our momentum and driving long term , profitable growth . And shareholder value . Global macro trends such as rising health care spending driven by aging populations , the prevalence of chronic diseases , and the demand for advanced treatments aligned perfectly with our strength .

Speaker #3: These dynamics present a unique opportunity for Fresenius to deliver innovative solutions through patient outcomes , while helping to advance cost effective healthcare systems .

Speaker #3: Our strategy remains centered on being a trusted partner to healthcare providers worldwide . While we are not entirely immune to external challenges like tariffs or our diversified portfolio and our local for local approach provides resilience .

Speaker #3: Additionally , our strong European hospital business , bolstered by Germany's hospital reforms , positions us to capitalize on these favorable developments as Europe's leading hospital provider , we leverage clustering and thereby benefiting from economies of scale while optimizing our operations and enhance patient care beyond scale .

Speaker #3: Innovation is central to our strategy . We are investing in AI and digital transformation to enhance clinical decision making , streamlined workflows , and improve patient experiences .

Speaker #3: These next generation capabilities will strengthen our leadership in medical quality and innovation . Our performance in the year to date reflects strong execution across our businesses .

Speaker #3: Fresenius is now a more focused and agile organization ready to capture the opportunities that lie ahead as focus turns to 2026 and beyond , we are committed to leveraging these strengths to deliver long term , sustainable growth , creating value for patients , partners and shareholders .

Speaker #3: With that , ladies and gentlemen , we'll open up for Q&A .

Speaker #1: We are now starting the question and answer session . If you'd like to ask a question , please press star , followed by one on your touchtone telephone .

Speaker #1: The operator will announce your name when it's your turn to ask a question in case you wish to cancel your question , please press star followed by two .

Speaker #1: The first question comes from Oliver Metzger . Please go ahead .

Speaker #5: Yeah . Good afternoon . Thanks a lot for taking my questions . The first one is on carb , and on nutrition . So surprisingly , was a quite strong performance in Q3 .

Speaker #5: So was the keto impact . Just lower than expected or has the remaining business performed better than thought ? Second question on Helios Germany .

Speaker #5: So in the market , we're still some consolidation ongoing and yeah , there's always this . Let's quarterly volatility . But can you talk about the volumes ?

Speaker #5: Do you see still the typical 2% volume growth . Or do you recognize just an uptake due to market share gains . As we see plenty of hospitals going out of the market .

Speaker #5: Thank you .

Speaker #3: Yeah . Oliver . Let's let's start with the question . I could make it easy and say yes , the rest performed and performed much not not better .

Speaker #3: But you know , we were able to demonstrate catering underlying demand . And , you know , things have to work on all cylinders .

Speaker #3: This is what happened , by the way , even in China , outside the national volume , based tenders , there's still some provincial , some regions left where keto can be catered .

Speaker #3: But outside of that one , you know , I mentioned in my speech three new launches worldwide , basically , you know , uptick in Europe on enteral nutrition , but also the US , even though it's a it's a low base , but a very strong performance .

Speaker #3: We started with lipids . Last call I said we are now adding other things like amino acids and and that all yielded to that great performance which you saw .

Speaker #3: .

Speaker #4: And maybe I can I can take the Helios Germany question . So if you look at the picture in Q3 , we actually had a very good activity , activity growth actually was around 7% .

Speaker #4: However , we did see some , let's say less complex cases within that activity , which means that if you look at it from a case , mix perspective and case weight perspective , there was a 4.4% growth for Q3 , i.e. above year , 2% .

Speaker #5: Okay . And regarding the market share gains , do you see more volumes apart from okay ?

Speaker #4: Market share gains ? It's difficult to tell . From one quarter to another . I think in general , what what we see and what we think should be there is a consolidation in the market .

Speaker #4: We have overcapacity in the market and we are under focused on quality . So I hope that with the new regulation , we will get more focus on quality , which brings us to our cluster concept and actually hopefully reduces the overcapacity we're seeing .

Speaker #4: And get some kind of productivity into the system as well .

Speaker #3: And to , to , to maybe add to that one . There is no consolidation opportunity for us . First of all , it doesn't fit our strategy .

Speaker #3: The second thing is that most of the systems, or let's say entities, which go out of the system are kind of like broke.

Speaker #5: Yeah , clear . No , thank you very much . Thanks .

Speaker #1: The next question comes from Hassan Al Vakil from Barclays . Please go ahead .

Speaker #6: Good afternoon . Michael , Sarah and Nick , thank you for taking my questions . I will squeeze in three , please . Firstly , clearly your guide implies a significant acceleration in Q4 and that has been your consistent messaging year to date .

Speaker #6: But why the wide range with a quarter to go , what are the key pushes and pulls into Q4 and specifically as you head into 2026 on Ebit growth ?

Speaker #6: Secondly , on the strength in nutrition at 7% , what are the key drivers here as well as , you know , for the broader growth factors given , you know , the strength in growth factor , margin , but also underlying car by margin despite higher corporate costs in car .

Speaker #6: And of course , Kato . And then finally on German hospital reimbursement , the surcharge is clearly one way . The hospital sector is being supported .

Speaker #6: But does the lower DRG for 26 leave you concerned about the possibility of a similar DRG inflator beyond next year , with surcharge ?

Speaker #6: Thank you .

Speaker #3: Yeah , I think let's start with the last one . I think this is crystal ball . We go one year to the other and there have been .

Speaker #3: How should I say this is a very special political situation where the German government and especially the Minister of Health , let's put it in my words , was under some pressure to rather compromise on fiscal priorities than , let's say , public health , topics .

Speaker #3: So I don't think this is a precursor for for the next years to come . On nutrition , we already alluded to there's a lot of new products which came to market .

Speaker #3: And as I said , in China , overall , obviously the entire numbers have been contracting because keto was missing . But everything else in all the other regions was firing on all cylinders , especially the US , as again , a small base .

Speaker #3: But the base keeps growing every quarter and it will be already a nice base going into the next year . And and it has nice margin conversion with the three chamber bags .

Speaker #3: And as I said now , amino acids and next year there will be more portfolio amendments to the solution . We have and maybe I'll share later on .

Speaker #3: Even a great news which happened in in the last couple of days . Also positive for Q4 , winning a big private research hospital in the US on not only Avonex pump , but nutrition , dedicated sets and so on and so forth .

Speaker #3: In in the US now on the guide , I think it is you mentioned it correctly . It is I think , important to differentiate between the absolute momentum we have and the momentum is just great and it will continue from an underlying business dynamics in all our businesses primarily , obviously , Kobe , and we can go through each and every individual business where the underlying fundamental dynamics in the market , us bringing new products , new innovations in the market , rolling out , expanding will obviously , we saw it in the first nine months , will happen in Q4 and will go beyond Q4 .

Speaker #3: So a Q4 close is a year end close and is not a cliff . So whatever happens at Q4 does not mean anything in the speed and the dynamics of the underlying momentum is in any way jeopardized on the contrary , it keeps accelerating .

Speaker #3: Yet on Q4 , it's a year end , and we need to look at a lot of us . And this will decide whether one thing falls into one side or the other side , and then talk about , I don't know , ten , ten basis points in the guide .

Outlook, there was no talk about tariffs, then the new Administration started. And, uh, you, you had the feeling the world is going going to collapse with tariffs. We always tried to stick with the facts and always be very, you know, transparent with you guys as to where we stand, and what the impact is. Now, where we stand today is different than, you know, a couple of months ago because, you know, uh, at least their statements out there that generics and biosimilars may be accepted. Uh, but there are

Tariffs which we even absorb in the upgraded guidance. So what I'm trying to say is there's a lot of moving Parts in the Regulatory and geopolitical environment, nobody knows what's going to happen. Then uh,

We need to have our budget which we have next week. But again, coming to the big underlying momentum biosimilars

Rejuvenate tie in.

Working nicely over the course of the first 9 months, we expect more in Q4. We expect more in going into 2026 into 2026, the nuzo map and us the keno map.

Are just being launched. You know, in Q4 this is, by the way, also a factor for Q4, where we land, uh, whether it's, I don't know x million or X Plus million. That doesn't matter because the momentum will come next year. This is a full commercial focus on the Bayou, similar team next year on really on the market and commercialization because, you know, there's no new regulatory approval where we have to work on on the documents. And so on so forth nutrition. I said in the US next to what we have now there will be more elements as in, you know, attachment to the portfolio right now. Uh, I can talk about compounding for example, so things are happening but they need to be executed. There will be, again, Launches on the, uh, IV generic side.

3.

Quarters. And this was driven. We have said it in the calls before by the Adaptive nomogram, which is software. Now, you know, there will be an annualized kind of impact of the active nomogram going into, q1 Q2. So, a lot of exciting things are happening. Obviously, uh, especially Sarah will make sure that the whole organization is disciplined on cost and uh, uh, and and cash and then we'll take it from there and upgrade update. You on the guidance, when we go into next year again because it's the beginning of the year will be very

Transparent with the assumptions. And obviously uh, I wouldn't say more conservative but because it's the beginning of the year and then we'll go step by step.

That was it?

So, AI. Sorry, AI. Yeah, AI is a topic. Um,

Look we we need to differentiate between the industrial side and and the hospital side in companies. We are embedding Ai, and Ai, functionalities and AI agents with Partners into our processes. Kabi has a big uh program uh being implemented on on further increasing commercial Excellence. Uh better managing the sales force data driven AI plays a role in there. We talk about um you know having a few AI pilot projects which

By the way uh then funded by a central Innovation budget when it comes to speeding up on regulatory approval uh that plays a role as we move now, having a real development machine on biosimilars. But this the same holds true for uh, uh, reg Affairs, uh, on IV generic. So AI can help you there on the on the documents and, and all these kind of stuff also, in in Tech Ops. When we talk about enhancing the manufacturing, these are all

How should I say little pilot projects? We have. And uh so this uh does not entail huge Investments but we are trying it out and on these pilot projects probably with we're going to see the benefits where for us. It plays uh uh a more nuanced role is on the care delivery side. There it is. Not only about, uh, the productivity efficiency as such with the efficiency. For example, with Kieran salute, applying AI, uh, on Doctor patients, uh, uh, conversations. We have a tool called scribe. We are freeing up resources.

And thereby are able to increase the throughput of patients and concurrently get to better clinical outcomes. So we have a few, let's say functionalities and even agents on that side but the impact there is obviously uh 1 of the key levers to drive. Also the margin of going forward.

Go ahead phone. Thank you, Micah.

Next question comes from the please. Go ahead.

Hello. Uh, thank you for taking my questions. Um, I have 3, please. Uh, first, maybe Michael on, um, the biosimilar, the FDA draft guidance on interchangeability which you qualified as promising. Uh what could be more concurrently the potential impact from lower R&D requirement in the US uh for your uh, biosimilar business model is that a pull forward of uh, sales of profitability? Or will you be Keen to to reinvest more, uh, to gain scale? Um, second. Um, we've seen a v on Bayou similarity. Sorry, we've still. Uh, we've seen a big cutting prices of human right in Q3 or or do you think this may impact the penetration of non originator branded products?

And um, lastly maybe 1 for Sarah, a quick clarification on the product share sales alongside Frozen medical career by back. Could you confirm, you're selling equivalent of what your stake is and, uh, what's the proceeds from that sales are used for? Is it to lower leverage further? Thank you.

Yep.

Hi, um, maybe. Let me start with the last 1, uh, straightforward. Yes, it's prata. So in the end, we will maintain our share, uh, relative shareholding in FMC. Um and actually, I mean, that funding goes into uh, lowering our, our leverage and into our overall Capital allocation. Yeah. So I think we are fully focused on getting free cash flow up and thereby creating additional Headroom for be it lowering our leverage or, uh, doing targeted investments into our business.

Uh, yes, it is a positive development which we see in the in the US, uh, you know, by and large.

all the developments in the US, whether

It's, uh, the whole tariff discussion. Whether it's a deregulation on bios, we are playing exactly into these themes with our portfolio. Also going into next year. And, uh, it has been already discussed prior, but, you know, uh, having enough clinical, uh, or scientific evidence so that you don't need to do a phase 3, clinical studies, obviously helps

to increase the time to Market that it's what it's all about. And obviously, to speed up the whole process, make it less complex, less burdensome because there's already a, a proof of the data and the interchangeability, it's a good 1, um, I would overestimate, but it's just another data point where today, if you want to get interchangeability designation, which we by the way, have on our uh um um the loom up. Uh, you need an extra study, so it's an extra burden. Uh, a special name for that study. This is also emitted, so that means that Marketplace is very, very, very vibrant. So, uh, uh, yes, uh, if there is any change on R&D, we will immediately reinvest it into into the pipeline into the portfolio.

Our strategy is clear to be a fully vertically.

Integrated player, our bios team calls, it a biosimilar Powerhouse. And that means you need to have a really robust Pipeline, and there's much more coming. Decisive point is the manufacturing because it is a very also competitive market. Uh, the manufacturing process is, is a complex process. You need, uh, bioreactors. Uh, you need to be competitive concurrently and so forth. Therefore, you also need to have a nice manufacturing platform. And then the commercialization also in the last only couple of 3 quarters 4 quarters has seen many, many changes from National formularies on tvms. Now, we were going to direct health plans, we may be going to direct employer plans. We have special deals like the direct, uh, distribution deal with civica, which is a new animal. So we view all of this as, you know, opening up the adoption and diffusion of

biosimilars.

The next question comes from Veronica dooba from City. Please go ahead.

Um, hi. Um, Michael Sarah, Nick. Thank you for taking my questions. I have 2, please. Um, the first 1 is just on the profitability of the growth vectors which obviously, I think is running much better than many of us expected. And I think Sarah, you remarked that you are now very, very close to the 16 to 18%, Coral, just curious. If you can, elaborate on what has been the source of the kind of upside this year from your perspective. And you know is this that we're starting to hit better profitability and devices is that that bio similar business, that's driving the surprise or anything else. If you can kind of give us some color and I guess as you fast forward, you know, how are you thinking about that? Kabi midterm margin guidance, especially for growth vectors given the progress that you are making this year. In spite of the keto had went. So that's kind of my first question and then my second question that you're going to laugh at me, but I'm not going to ask about 2026. I want to ask about 2027 there has been a lot of debate about whether the invoice.

Or charge creates a meaningful cliff for your Helios profitability as we move into 2027. So I wanted to give you guys an opportunity to touch up on how you're thinking about the benefit from the search charge when we move into 2026 and then how that unwinds into 2027. And I guess simplistically, what your degree of comfort is with the Helios expectations that are in consensus right now for 2027. Um, you are welcome to shut me down, but I got to try.

Thank you.

No. Um, hi everyone. Um, happy to take a go at your 2027 question. I think, first of all, it's it's fair to say, if you look at the German reimbursement schemes, you have seen that probably since 2019, or even prior we always had changes in regulation. Always had during Co it was, it was, it was gotten to an extreme of these. But since then we have always had different pockets of funding because we are navigating in an in an industry which is structurally underfunded

So I think there are always some extra pockets as an add-on. I think, if you appreciate, when the whole topic comes through charge, came it was a third charge on the OG inflator and people assumed the OG inflator to be similar to last year. Now, as Michael see, actually, as Michael alluded to

It was a very particular situation in which the decision or in which the discussion on the drg inflated came about that. It was not between the 2 kind of data points, the 5 point something and the 3 points uh that they opted for the lower end. Um, I think that was a very there was a decision taken in a in, in a special situation now where does it leave us? Um, simply and and I only go from a pricing perspective. Now, simply if you take the Third charge, um, and what

May most likely become the DG.

You're close to where we are this year around in terms of math.

Now does that leave us with a cliff? Because the Third charge will go away? I would say that so far we have always experienced that as we operate in a sector, which is chronically undefined

That there will be new pockets opening. We hope I think that is our institutional uh expectation. That we see regulation which gives us more clarity and longer term perspective because obviously we are navigating in an environment which is not helpful to have those Pockets shifting year over year, but I think also, you can rely on. If you look at the Helios performance, we have managed that quite well historically. Irrespective of what what those reimbursement schemes were? I think we were the ones who were relatively adaptive to it from the start. So bottom line, am I concerned about the cliff know? I am not that will be other Pockets uh, of value and funding because they need to be in the structure. We currently operate in, yes.

I think there was a very perfect answer, and Veronica, probably the what is also behind the question for your clients, and hopefully our investors, are we afraid of regulatory, you know?

Going up and down and so on so forth. In a business, which we actually deem as very reliable and stable and Sarah just gave the answer. The fact of the matter is that roughly 80% of German hospitals are in Reading

So either, they, they support the whole system via these mechanisms.

Or they will go out of business. And then we will catch the patient.

Uh, and and we have the cluster concept. And that is why we are so hitting. So much on driving our program irrespective of regulatory changes that we're ready to, you know, have the best capacity utilization of our of our in essence infrastructure assets. And with the help of digitization, which we see in Spain works, you know, navigate the patients, uh, through complex, and less complex cases. Now, uh, with regards to, uh, where is the kabi margin ban? Well, this is also something we, we got to look at that 1 when, uh, when we go out next year or maybe uh, the year after or in between

This is an involvement. I really wanted to remind everybody where we started. We started with the 15% to 17%, and the margin of the overall Kabi business was below that margin band. If you look at the makeup of the Kabi EBIT contribution today, it's almost half-half.

Uh uh um a growth vectors versus um the base business which is also contributing and and and growing. So that has been the strategy all along and Will Remain the strategy. The only point now in rejuvenate is this new Innovative things which we have on for the last

2 years, 3 years, even are now coming to Market.

Let's go through them 1 by 1, Medical Technology or Medtech.

Of course they have a program which is a competitiveness program. They call it above and beyond

But also going on, you know, new products. Like I said adaptive nomogram. Adaptive, nomogram is software and in Parts recurring Revenue.

And it's a new thing and it's picking up and there will be pickup in Q3 Q4. And then we will come up with what lies behind beyond that 1? In the end of 26 or 27, Ivan x. Uh, yes. We know that we have, let's say some, some, uh, homework to do in industrializing that 1.

Is enormous.

I just shared with you that we, we just uh, received a contract from a large, uh, private Research Hospital in Florida on x amount of Ivan X, Pump together with solutions, to together with nutrition to together with dedicated and non-dedicated sets which shows you how we can deepen. Also on customer engagement with a portfolio. We have biosimilars has been driven primarily by tyen this year.

and will be driven by tyen next year by the nus map by uh, USA Keno map

By still Ada Lima.

By map science, their Partners selling Biv.

And to some extent if we really achieve at some point, the fully vertic vertically integrated biosimilar Powerhouse.

Then the Milestone payments will play a minor role already in the makeup of the whole thing. Today, they play a minor role compared to what the molecules are, are catering.

So thereby, um, it it remains what we said the Dynamics is great.

Happy to give you some feedback on Q3 which indeed was a good 1 15.9% margin. Um, you know, if you look at it, it derives from really the volume of of Topline development. Um, we have seen in pieces some nice, uh, price development. Overall it was a good mix, there were some Milestones on biofarma and also don't forget, we do have a very strong cost and efficiency discipline in there as well, which also helped the margin this quarter.

We've got 3 uh participants left. So if we can uh encourage them to stick to the 1 to 2. Uh then hopefully we can be finished in the next 15 to 20 minutes so I think Graeme Doyle at UBS over to you please.

Graeme.

Questions. Oh yep.

I am not on mute.

You're good. I am you're good, you're good. Okay, perfect. Thanks guys. Um, yeah, I can stick to 2, um,

Michael just on the sequential Improvement in biofarma, just to kind of help us model you were up kind of 40 million in Q3, is that sort of what we should be thinking. For a Q4 just help us to model as we then ramp into next year. And then the second question is around the, the German search charge would next year. Be a good year maybe to do some of the

These kind of interesting Investments are maybe pull forward something from say, 27 to help kind of smooth the numbers through the years. Is that something that you could do? Thank you.

Service the second 1. Well, if I, if I got it, uh, correctly on investments on, you mean, for the overall group?

Yeah, for over a week. Exactly, exactly.

look, I think um, on the and I wouldn't make it on the search charge to be very

because we said, if you take 3 church books, what's going to be in debate on the duge, you're not too far off from what we've seen in this year's Gog, but coming back towards Micah said, is we see a very strong momentum. In our businesses we see a lot of positive momentum on the cavi site, but we also with the company program coming to fruition and some annualization effects in 26, that should also be some positive effect on The Helio side. If you take all of that together, of course, in the context of rejuvenate, we will step up our investment focus. And I think on Capital allocation,

I said the leveraging will remain cool but at the same time we're balancing that with delivered Investments and you know, maybe even Q4 if I look at the momentum, we currently see and where we are on the Carby side here to date. Maybe we may take some decisions to, you know, do some incremental Investments also in Q4 because in the end it's about fueling our Pipeline with a step up in R&D with step up uh, in capex and we Step Up In other Investments and

We are prepared to do that.

Yes. And then Graeme I can make it short so that the others have time uh you know the 40 maybe a bit too high fetched. I mean already going from Q2 as I said uh which was the 40, there will be incremental sequential growth but uh 40 maybe too high.

Perfect. Thanks a lot guys. Really appreciate it.

The next question comes from FICO fredri, from De Bank, please go ahead.

Thank you, let me keep it to 1. Um it's on the the farmer margin within kabi um trending around 22%.

Um, you said around 20% is a reasonable level for the business. So if a 22% a new 24, this business or is this, just an extraordinary year and sort of starting next year. We should be eyeing, rather, the 20% again, thank you.

Yeah, well, we can make that 1 short. We said, uh, by and large take a ruler and take 20% that can be quarters, where it's higher and that can be quarters. Where it's lower, uh, the Q3 number was

quite strong, uh, because we decided to, um, you go for

Commercial batches rather than stability batches. That is what Sarah also, alluded, to R&D type of things investments in, in, in Q4. So, uh, stability batches, as, you know, are needed for future launches products, which is future Revenue, which will come in Q4, which, uh, we, we took a deliberate decision to, to take it into Q4, and rather give the capacity to commercial batches. That is the in, in essence by QC and Q3

Thank you.

The next question comes from David, Eddington from great. Thank you. Um, maybe to related to the last question. Really, the the year to date margin of carb is 16.6 and yet you've kept the 16 to 16.5% fully arranged you you pulled out some needs some Investments potentially, I'm guessing on the R&D side in Carby is that why the you haven't increased the range for the full year and maybe just some uh help around how we should be modeling that what quarter margin?

If you look at where we stand today, I think having a very strong performance in terms of uh, in terms of margin. But you know, it's the underlying momentum, we are seeing which is strong. Now if you look at Q4, as Michael said there is a its year end. So ah, yes, we will take the freedom to take potentially some investment decisions. Um, B, there was some more positive phasing in Q3. We are where things came earlier than initially anticipated, and then as the business turns to year, end obviously, there are, you know, topics whether we post the badge, uh, end of December or beginning of January, doesn't really change the underlying or mental model of the success of the business.

And of course around here. And you have customers wanting something from.

Not wanting something you have suppliers wanting something from us or not wanting something for us. You have final settlement final invoices and so on. So it's it's just a quarter which you know we will diligently work through but we don't see a change in the underlying momentum.

Last question. Uh, thank you David. Um so Michael um if there's anything you want to conclude with, otherwise know I would want to conclude with uh reiterating where where also Sarah left it, you know, look at the business, look at the underlying momentum which is in the each and every individual business. This is a strong momentum which going to carry also in a 2026 and then we'll take it from there.

So thank you very much. We can conclude the call back and we look forward to seeing folks in Paris tomorrow.

You want to thank for Zenius and all the participants for taking part in this conference call goodbye.